Lufthansa Consulting Helps Iraq in Emerging-Market Push

By Richard Weiss -
Feb 12, 2013

Deutsche Lufthansa AG’s advisory
unit is pursuing at least 10 percent annual sales growth as
clients such as Iraq, which is reviving its airline, tap into
the German carrier’s experience in safety and infrastructure.

Lufthansa Consulting is helping reorganize regional routes
at its parent, Europe’s second-largest carrier, while advising
customers in emerging markets including Russia, Brazil and the
Republic of Congo on setting up airlines or selling state-owned
airports. Project growth may let the unit double its workforce
in the medium to long term from about 100 employees now, said
Andreas Jahnke, the head of the division.

“There are lots of opportunities for us helping clients
set up a new business or helping an established airline to deal
with the new market realities -- for example, increasing
competition from low-cost airlines,” Jahnke said in an
interview at Frankfurt airport, where Lufthansa has its main
hub. “We are amazed by how many new airlines still pop up.”

Middle Eastern, Latin American and African markets
propelled a 5.3 percent jump in global passenger traffic last
year, according to the International Air Transport Association.
Plane manufacturer Airbus SAS is forecasting that in the next
two decades, more than half of growth in traffic, measured as
the number of passengers multiplied by distance flown, will be
generated by emerging economies.

Airport Projects

The unit has a memorandum of understanding to help re-
establish state-owned Iraqi Airways’ international operations
now that the nation’s security situation has stabilized, Jahnke
said. Lufthansa Consulting also has an initial agreement to help
Mosul airport in the north of the country develop catering,
plane maintenance and marketing, expanding on projects with
ground handling there and at Baghdad and Basra airports.

The Republic of Congo’s 18-month-old Equatorial Congo
Airlines was developed in conjunction with Lufthansa Consulting,
which also managed the state’s sale of its three main airports,
Jahnke said. Other projects have included helping Saudi Arabian
Airlines set up a customer-loyalty program and enter a global
alliance as well as airport sales or reorganizations in Moscow
and Sao Paulo and across Greece.

“Security levels and procedures vary greatly, depending on
where in the world you are,” Jahnke said. “The Lufthansa brand
is a quality seal that helps open doors for us worldwide.”

Revenue Contribution

Lufthansa Consulting, whose competitors include Seabury
Group, ICF SH&E and units of IATA and Air France-KLM Group,
generated 16.3 million euros ($22 million) in revenue in 2011,
less than 0.1 percent of the Cologne-based parent company’s 28.7
billion euros. That compares with 4 million euros in consulting
revenue at Paris-based Air France, Europe’s biggest airline by
traffic, which posted 24.4 billion euros in sales in 2011.

The German carrier has a year-old reorganization program,
dubbed Score, with a target of adding 1.5 billion euros to
operating profit by 2015 through reduced spending and increased
revenue. Among the consulting unit’s other work for Score, it’s
helping plan Lufthansa’s shift of European routes not linked to
its Frankfurt and Munich hubs into the Germanwings low-cost
brand, Jahnke said.

Work for Lufthansa may eventually increase to about half of
the consulting division’s business from about one-quarter today,
he said.

The unit’s offering includes services to oil companies and
offshore wind park operators with large helicopter fleets amid a
move into other industries, emulating the way sports-car maker
Porsche SE provides advice on factory design to manufacturers
outside automotive producers, Jahnke said.

“Safety and risk management are key success factors for
companies beyond our sectors,” Jahnke said. “Here we can build
on our expertise, similarly to Porsche Consulting, who are
marketing their know-how in the area of lean-production methods
beyond the automotive industry.”